US Fed Cuts Rates For Third Time In 2025 To 3.50%-3.75% Amid Slowing Job Market And Persistent Inflation, Jerome Powell-led FOMC; Here Is Everything You Need To Know

US Fed Cuts Rates for Third Time in 2025: What It Means for You

One more time, the US Federal Reserve has rolled out a new economic game. It was much awaited annoucement around in the markets around the world. On December 10, 2025, the Fed’s Federal Open Market Committee (FOMC) announced a 25-basis-point reduction to its benchmark rate, thus sealing the third round of cuts in the same year. Also marking the lowest till now. The federal funds rate is now resting at the 3.50%-3.75% range, lowest level it has been in almost three years.

I know some of you might be curious, So, to put it simply, here is a question; why should you care?

Lower rates mean it is possible that the cost of borrowing will drop, mortgages, car loans, and business finance are the fields one should think about. On the other hand, the return for depositors will hardly change at all.

So This change in rate is the last signal from the Fed that they are trying to strike a difficult balance between the two: Supporting a slowing job market while also controlling inflation, which remains persistently above the 2% target level.

The markets, the investors, and the households are all closely watching this, after all, when the Fed speaks, everybody listens. Might it be that your next loan or investment decision will be influenced by this cut? The answer is most probably, yes.

What Were The Reasons For Fed’s Rate Cuts Again?

• Softening of Labor Market: The year 2025 saw a dramatic reduction in job increases, and there was a slight rise in unemployment. Even though the creation of new jobs is still going on, the tempo is not high enough to empower the economy entirely. The Fed made the move of reducing interest rates in order to stimulate borrowing, which in turn would help to keep hiring alive and stop the slowdown from turning out to be more severe.
• Inflation Still Very High: Prices are still not low enough. Goods and services, especially those that have tariffs imposed on them, are still quite expensive, and this keeps inflation above the 2% target set by the Fed. Although the overall economy was reluctant to grow, the pressure from inflation was too loud for the policymakers not to listen.
• Odd Timing: Interest rate cuts are usually seen in straightforward recessions or significant economic slowdowns. By reducing rates while inflation is still a problem and growth is uneven, the Fed is letting the world know how delicately it is trying to maintain a balance between economic support and price pressure control.

Market Reactions On Fed Rate Cut

Global markets reacted cautiously to the Fed’s decision:

• US Stocks: Dow Jones (+1.31%), S&P 500 (+0.85%), and Nasdaq (+0.54%) rallied moderately after the rate cut.
• Treasury Yields: Long-term bond yields fell, signaling expectations of continued lower borrowing costs.
• US Dollar: The dollar softened against major currencies, reflecting anticipated lower rates relative to global peers.

Analysts caution that while the rate cut supports economic activity, the Fed’s cautious tone suggests potential market recalibrations in 2026.

(This Article has Inputs From Agency)

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